Walking out of a subway station at Shanxi South Road in downtown Shanghai to meet a potential client, student Shen Yiwen looks more like a standard office worker in her black business attire.

Unlike most of her classmates who are busy filing resumes and arranging job interviews, Shen, majoring in financial management at the Shanghai Institute of Foreign Trade, seems not at all concerned with the severe employment situation facing graduates this year.

In fact, Shen, who is set to graduate in June, already mapped out her own career path as early as six months ago -- starting up her own public relations consulting company with three classmates.

The company, with an initial start-up fund of 30,000 yuan from the four students, became operational after it was registered late last month.

"I admit that as students, we lack the funds or experience of big companies in this sector, but I think that our enthusiasm and tenacity will eventually make up for this," said Shen.

The 21-year-old is just one of many students in Shanghai who, faced with an increasingly worrying employment situation, have decided to set up their own businesses.

Statistics from Shanghai Municipal Education Commission show that 158,000 students will graduate from the city's universities and colleges this year, up 9,000 from last year.

In 2008, the overall employment rate of college graduates in Shanghai reached 91.6 percent, but this figure is expected to drop sharply this year.

To cope with the severe employment challenge, the city's education and personnel departments jointly issued a package of measures at the end of January in a bid to create more job opportunities for graduates.

For example, the education commission has decided to launch a "township teachers' employment program", recruiting around 1,800 graduates to work in its suburban primary and middle schools. It also decided to recruit 1,000 graduates to work for village committees in suburban Shanghai, and 300 to work in the nation's less-developed western provinces.

Graduates in Shanghai are being encouraged to take part in professional fieldwork prior to graduation, in a bid to better exercise their skills and enhance links between students and their future employers. By the end of this year, there will be over 3,000 graduation fieldwork bases in Shanghai, with the total number of trainees reaching 30,000.

The city's industry and commerce administration also announced recently that graduates would enjoy "zero costs" in business start-ups, scrapping minimum registration capital requirements and other administrative expenses.

Fang Huiping, chief of Shanghai industry and commerce administration, said self-employed students who graduated within the past two years were all eligible for the deduction for a period of three years from the registration of their start-ups.

However, what extent can such moves can really benefit graduates and ease employment tensions still remain to be seen.

"It's hard to tell. We will have to wait till March, the deadline for annual start-up fund applications, to judge its real effect," Wu Xiujuan, an official from Shanghai Technology Entrepreneur Foundation for Graduates, told China Business Weekly.

The organization, launched by Shanghai municipal government in 2006, has so far helped to fund 331 start-up projects for graduates from a total of 1,231 applications, of which 256 had completed their registration and entered into business by the end of last year.

These start-ups have created jobs for about 1,800 graduates in industries such as information technology, new materials, machinery, services and consulting.

A lack of funds and expertise has long been the biggest obstacle for the robust development of such start-ups in the risky business world. A survey conducted by the foundation showed that among all of the start-up firms they supported, about half, or 49 percent, were struggling.

"As for me, 'zero cost' may on the contrary mean higher risks," said Shen.

She said such a policy may offer some relief to start-ups, but taking into consideration the actual cost of a company's sound operations, such support is far from enough.

For example, her company needed to hire an experienced accountant and some experienced advertising sales staff, and their salaries were a burden for the new start-up.

"I think more support should be given to help start-up firms realize growth, this needs a great deal of support in not only the policy arena, but also in capital and technology transfer from the government and the whole of society," said Wang Xinkui, president of Shanghai Institute of Foreign Trade.

(China Daily February 16, 2009)